The following information refers to Percy's Records and its competitors in the music store business. ?Current RatioQuick RatioPercy's Records2.00.95 Jewel CDs 1.51.00 Rudy's Raps1.81.20 Marvin's Jazz1.90.80 Industry Average2.01.00Required:Comment on the relative liquidity positions of these companies.
What will be an ideal response?
Both Jewel CDs and Rudy's Raps have acceptable levels of liquidity. However, even though Percy's Records and Marvin's Jazz have acceptable current ratios, their quick ratios indicate a potential liquidity problem. We should attempt to collect additional information to support or refute the evidence of a potential liquidity problem.
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